IMF says Oman's economic recovery continuing

Oman has welcomed a report from the International Monetary Fund that finds that the Sultanate's economic recovery is continuing.

The 2023 Article IV Consultation Report, approved by IMF Executive Board, was issued following a series of consultations between IMF experts and over 20 government and private entities as part of the annual periodic consultations under Article IV of the Articles of Agreement of the IMF.

The report says that Oman’s economic recovery is continuing, supported by favourable oil prices and sustained reform momentum. This was demonstrated by 4.3% growth in real GDP in 2022, driven in part by the growth of the hydrocarbon sector, despite a slowdown in the first half of 2023 on the back of OPEC+-related oil production cuts.

Non-hydrocarbon growth also accelerated from 1.2 percent in 2022 to 2.7 percent in the first half of 2023, supported by recovering agricultural, forestry, fisheries, construction activities and a robust services sector.

In terms of domestic price levels, the report highlights the factors that contributed to containing inflation, which fell significantly from 2.8 percent in 2022 to 1.2 percent during January-September 2023. These factors include subsidies on basic food items, caps on domestic petroleum prices and the peg to a strong US Dollar.

The IMF report praises the Sultanate of Oman’s prudent fiscal management, which helped to turn fiscal and current account balances into surpluses in 2022 along with non-hydrocarbon primary deficit remaining on a downward trajectory.

In addition to the improvement in the current balance to a surplus of 2.8 percent of the GDP in 2023, central government debt as a share of GDP declined from about 68 percent in 2020 to 38 percent in 2023, supported by higher oil prices, economic growth and the prudent fiscal measures adopted by the government.

This was reflected in the Sultanate of Oman's sovereign credit rating upgrade to one notch below investment grade.

The IMF report praises the resilient banking sector in the Sultanate of Oman, with profitability recovering to pre-pandemic levels. The report also indicates that bank capital and liquidity ratios are well above regulatory requirements, maintaining high-quality assets. The report also praised the good performance achieved by the sector in buffering recent shocks, as stress tests suggest that banks are resilient to credit and liquidity turmoil.

The IMF report stresses the need to accelerate the Oman Vision 2040 reform plans and promote investments from regional partners to sustain growth momentum.

The report highlights a number of risks that could impact economic projections, including a decline in oil prices from the economic deceleration in China and a slowdown in the implementation of the reform agenda, as well as indirect spillovers of the ongoing regional conflict.

This is an unofficial English version of an Arabic report. To view the official Arabic text, click here.